With the stroke of a pen, Governor Phil Murphy has forever changed the dispute resolution process for employees and employers in New Jersey by rendering unenforceable any provision in an employment contract or settlement agreement that waives "any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment". As of 18 March 2019, Senate Bill 121 has amended New Jersey's longstanding Law Against Discrimination (NJLAD) to prohibit any contractual provision that conceals "the details relating to a claim of discrimination, retaliation, or harassment".
Under the new law, any such agreement is now void as "against public policy and unenforceable against a current or former employee who is a party to the contract or settlement" if the provision has "the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment". Additionally, employees are now protected from retaliation under the NJLAD if they refuse to enter into a contract with a provision prohibited by the new law. Backing this up, employees have a private right of action for violations of the statute under common law tort theories and can recover reasonable attorneys' fees and costs.
Notably, the new law applies to all existing and future agreements, except collective bargaining agreements. The law also preserves the enforceability of certain restrictive covenants, including non-competition agreements and provisions protecting confidential and proprietary information.
As a result of the new law, employers have some work to do – in particular:
- existing contracts must be reviewed for unenforceable provisions; and
- appropriate amendments to contracts that violate the new law must be made.
Further, employers must ensure that future contracts do not contain these unenforceable provisions.
The new law further provides that all agreements settling claims under the NJLAD must contain a prominent and bold notice provision stating:
although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.
The new law may, in fact, raise more issues than it promises to resolve. Real questions remain as to whether:
- any form of arbitration agreement will remain enforceable under the NJLAD;
- the Federal Arbitration Act will pre-empt this change to state law; and
- contractual provisions limiting access to courts, such as jury waivers, will remain enforceable.
However, the bottom line is that employees and employers will now have to deal with the ramifications of no longer being able to agree to keep the nature and details of their resolution of NJLAD claims confidential.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.